Sonic Corp. outlined a number of initiatives the company has lined up for 2010 to boost sagging same-store sales and differentiate the brand as "distinctively Sonic," executives said during their Analysts Day webcast.
Dominic Losacco, Sonic vice president of marketing, described the company's new marketing plan, which is trying to get more out of a marketing budget slashed by $14 million. To make the most out of this year's $170 million budget, the company will continue its national cable spend while increasing its local market focus with a new strategy it has dubbed its footprint media strategy.
Sonic's footprint media, or direct investment, strategy will feature a mix of television, outdoor, online TV, social media and zone cable advertising efforts unique to each market. The new strategy evaluates individual markets based on the number of people living within 3 to 10 miles of a Sonic store divided by the total population in the entire market.
The company's shift of media funds should resulted in increased impressions, almost on a store-by-store basis based on test results. Tests of the new media planned have resulted in a "tremendous increase in impressions" and often positive same-store sales, Losacco said. The company anticipates its low-footprint markets will see an average 85 percent increase in media impressions.
Losacco said TV remains the brand's primary advertising vehicle, but the company also sees value in having a strong mix of media channels. Social media is an important part of that mix, with the company actively monitoring online impressions and aggressively pushing messages out.
Sonic's marketing message will focus on its differentiation, such as its carhops and higher quality products, rather than value. Last year's value push did not improve same-store sales — systemwide comps were down 13.4 percent for the most recent quarter — while this year's bundle deals are seeing positive results, Losacco said. For example, the company found that most customers — 80 percent to 90 percent — who purchased a bundle deal, such as a Steak Toaster Melt and free onion rings, also purchased a full-sized drink.
Clifford Hudson, Sonic chairman and CEO, said the company expects the new media plan to pay off for the company. "By this time next year, we hope to have positive same-store sales plus the learnings from the new media plan."
Product development
The advertising will support several new product launches, including an improved ice cream using the tag "real ice cream," a term that had the greatest impact in tests. That product will launch May 17. Other new products include a new line of Loaded Burgers and a Footlong Quarter-Pound Coney dog.
Hudson said the new products will return the brand to its prior level of quality. In recent years, the quality of its coney dogs had dropped while the price point edged over $3, negatively impacting sales. Sonic operators will absorb the higher cost of the new burgers and coney dog in order to keep the price point at a consumer-accepted level.
Sonic also has started to roll out its new Ultimate Drink Machine, which will ramp up the number of beverage flavor options. The new equipment requires no capital investment and is part of the company's contract with The Coca-Cola Co. The national rollout should be complete by the end of 2011, with new flavors such as Coke Zero, Fanta and green tea.
